I will increase my C:\ drive from 60GB to 80GB while the VM in powered on.
Open vSphere Client right click the Windows 2008 VM you need to expand disk, and select Edit Settings.
Increase capacity to your desired capacity, in this case I bring it to 80GB:
Now go to your Windows VM, run diskmgmt.msc
You will see the unallocated capacity. If not click Refresh button.
After this you will see the system partition increased to the new added capacity.